Reinvest Your Raises

tithe, pay my bills, save some, and always have ice cream money. Through the years, I added investing to the list,” she says.

She also added something else to the list of things to do with her savings — giving back. Her regular tithing and contributions to the United Way through a payroll deduction ensure that some of her earnings are helping good causes. And although she has no children of her own, Brown is making sure her four nieces and four nephews, who range in age from 8 to 30, are well taken care of by designating them beneficiaries of her 401(k).

No doubt, Brown’s done well. But her next goal will require a quality-of-life adjustment to her budget. She wants to buy a home, three bedrooms and 2,500 to 3,000 square feet, which she figures will cost her about $200,000, Not surprisingly, she has some money saved for a down payment — she’s aiming for $30,000 to $40,000 — and she expects to get the rest when she sells her condo, which has a current market value of $77,000. “The reality of having a new home is that for the first time, I will have to increase my monthly obligations. I’ll want to buy new furnishings, and there will be maintenance and upkeep costs,” she says. “But I’m OK with this. I never really wanted a home before, but it’s become important to me now, so that’s what I’m going to do.”

Master saver Gloria Brown offers this advice:

Don’t spend your raise. The cornerstone of Brown’s saving strategy has been to channel her pay increases into investments. “If nothing else about your circumstances changes yearly, set aside your raise for automatic savings,” she says. “What you don’t see, you can’t spend.”

Treat yourself. Leaning on her uncle’s advice, Brown says, “Maintain enough personal income to have ice cream money. It’s important to treat yourself. Total denial does not work.” She also recommends you buy yourself a birthDay present. She’s taken her own advice: she purchased her condo in 1992 for her birthday and a bought herself a diamond ring on her 36th birthday.

Give back. Brown does not believe you should save just to keep all the wealth for yourself. “It’s about sharing and giving back,” she explains. “Part of my savings philosophy is to save so that I can give; it enhances my commitment.”